Lobster appears to be the next battleground between the U.S. and Canada when it comes to trade.
That’s because a new trade accord between Canada and the European Union is giving the Canadian lobster industry an advantage over American lobster fishers and that is causing anger and concern in the U.S.
As part of the free trade deal, European countries are lowering the duties they impose on Canadian lobster imports and that is giving Canada a competitive price edge of as much as 20% over shellfish from the neighbouring U.S. This competitive advantage has the American industry in fits and the lobster industry calling on politicians in Washington, D.C. for help.
"The Canada-E.U. agreement puts American lobster exporters at a serious disadvantage,” Maine Senator Susan Collins warned in a newspaper column last month. "Unlike the Canadians, our exporters face tariffs … to sell into the European Union, which until recently was a very strong market."
Collins raised the issue with U.S. Trade Representative Robert Lighthizer when he appeared before the Senate finance committee in July. Lighthizer is leading the current North American Free Trade Agreement renegotiations on behalf of the U.S. And Canada’s European lobster advantage seems to underline the benefits of free trade deals that U.S. President Donald Trump has disparaged.
Lobsters are Canada’s biggest fisheries sector, with exports worth about $2.1 billion annually.
Europe charges tariffs ranging from 6% on frozen whole lobster, to 8% on fresh lobster, and 20% on processed lobster. The live-lobster duty has already been dropped for Canada under the Comprehensive Economic and Trade Agreement (CETA), while the other levies are being phased out over five years.
The impact is being felt by the U.S. lobster industry, which, until recently, sold about $200 million worth of lobster in European countries, accounting for 20% of their total exports. Maine accounts for 80% of the American lobster catch each year.
The Maine Lobster Dealers Association brought their concerns to Lighthizer this past summer, but the situation has worsened since then with China’s retaliation against the initial round of American tariffs. A new 25% duty China placed on U.S. lobster is undermining what had been a growing market for U.S. lobster worth $137 million in 2017.
